The past week or two have generated a couple interesting insights into the world of government and business and the ethics, or lack thereof, of both partners.
Most recently, a report released by the federal government indicated that contractors doing business with the government have routinely overbilled for their services. In fact, as one Globe and Mail article reported, as of the last budget year government internal auditors looked at $7.3 billion of contracts and cumulatively found $72 million in potential “over claims and excess profits.”
To be fair, this information was reviewed by the Harper government — but very little, if anything, was done about it, and only time will tell if the Trudeau government will do anything differently. The report claims this has been going on for decades, and that much of the money has never been recovered. Why has the government not been diligent in recovering the money?
“Concerns have been expressed that imposing contractual limits in profit may be counterproductive and undermine sustainability of service delivery and financial viability of the contractor over time,” the report says, hinting at a system of necessary overbilling in the name of maximizing profits.
Now ask yourself this: If you or I collected more money from the government than we should have, do you think they would be so sympathetic to our need for “sustainability”? Suppose you needed a little more E.I. to get you to your next seasonal job; well, all I can say is good luck with that!
Another case, reported just a couple weeks ago, is even more aggravating! The Canada Revenue Agency discovered through leaked documents that multi-millionaire clients of KPMG had been caught using what’s been called an offshore tax “sham” on the Isle of Man — reportedly to the tune of $130 million. Blatant tax evasion, many would argue.
One would expect this to be dealt by the full force of the law: prosecution, interest charges, penalties, etc. Let’s go get the bad guys! After all, if it were you or I avoiding our taxes, we would likely expect to spend some hard time behind bars. I mean, the Harper government, who again was in charge when all this occurred, was all about law and order, right? We all remember the ‘lock ‘em up and throw away the key’ and ‘do the crime do the time’ mentality of the Harper Conservatives.
Not so fast, though. Remember, these are wealthy business people, and so it seems the government was willing to work out a special deal. A much kinder and gentler tax department showed itself. In this case the clients simply had to agree to pay their back taxes and modest interest on these offshore investments, which they had failed to report on their income tax returns.
In stories similar to these, we often hear a similar tone from private interests — the privileged, self-righteous minority: You can’t increase our taxes. We employ people. If you do that we will go out of business. We need to charge higher prices. We can’t be environmentally responsible. We can’t afford to pay a decent wage. We need government incentives. And on and on!
It all becomes a little tiring, maddening, and in many cases all too disingenuous. As both of the cases above illustrate, business and government relationships should be looked at under closer scrutiny, because you know who gets the shaft when all is said and done. The taxpaying consumer!
Paul Green / St. John’s